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Insights on money, career and trading

How does motor trade insurance work?

Posted on December 6, 2016 by Daniel at 3:20 pm

Motor trade insurance, also known as road risk insurance, is a specialist insurance policy that’s taken out by business owners whose company involves cars, vans and motorbikes. This could be a car garage, a valet service or MOT centre, or any other business that revolves around motor vehicles. But how does motor trade insurance actually work?

We spoke to insurance specialists, Insurance Revolution, to get the lowdown on this specialist type of cover.

Do you really need motor trade insurance?

If you’re a motor trader, then the law states you need motor trade insurance cover to ensure that your business is legally operational. The type of motor trade insurance that you need to take out, however, depends on which area of the motor trade your business operates in.

By law, the least amount of cover that’s required is a Third Party Only policy. Other options are Third Party, Fire and Theft and Fully Comprehensive. Remember, Third Party Only policies are not always the best value, so it’s worth shopping around to find the best deal.

What levels of risk can be covered?

Third Party Only: this is the minimum level of cover that you can legally have, and covers injury, loss or damage to third parties. Third party only insurance does not cover you for the cost of your own vehicles.

Third Party, Fire and Theft: this type of policy covers you for third parties, as well as damage, loss, fire or theft to any vehicles that are in the custody of your motor trade business.

Fully Comprehensive: fully comprehensive insurance covers you for everything that the previous two options do, as well as providing cover for your own vehicles, should accidental damage to them occur. This is usually the most expensive level of cover, and would cover all vehicles involved if there was an accident whilst you were taking a customer’s car out for a test drive.

What is Motor Trade Liability Insurance?

Motor trade liability insurance is a policy that covers public liability, employer’s liability and sales & service indemnity. This covers you if a member of the public or one of your employees injures themselves on your business premises, you’ll also be covered for any accidental damage to property on your premises.

What is Combined Motor Trade Insurance?

Combined motor trade insurance protects the motor trader’s entire business, including the business’ money, vehicles, tools, liabilities and premises. It also covers motor traders who operate from their own home.

Motor trade insurance is vital in the successful (and legal) running of any motor trade business. Did you know that you don’t always have to go the bigger insurers to get the best value policy? Many smaller, specialist insurers will be able to give you the best deal, so it’s worth shopping around to ensure you get the most for your money.

Insights on money, career and trading